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Wednesday 18

October, 2017 4:01 AM



Investor lending bounced back in August

Investor lending bounced back in August

The value of investor mortgages rose 4.3 per cent in August to $12.6 billion, the largest monthly increase since APRA's intervention on interest-only loans.

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By AAP 12.10.2017 02:41 PM

Investor mortgage lending staged a surprise recovery in August but the banking regulator's intervention in the home loan market is still being felt.

The value of investor loans rose 4.3 per cent over the month to $12.6 billion, surpassing a rise of 0.9 per cent in owner-occupier loans to push the rise in total housing finance to 2.1 per cent.

ANZ senior economist Daniel Gradwell said the monthly increase in investor lending was the largest since the Australian Prudential Regulatory Authority told the biggest banks to limit interest-only lending to 30 per cent of new mortgages.

However, he indicated the March announcement was still having an effect.

"This only just offsets the large fall in the previous month, and investor borrowing is still lower than it was earlier this year," Mr Gradwell said.

"In annual terms, investor growth of 6.5 per cent is well below the peak of 26 per cent recorded in January."

Commonwealth Bank senior economist Michael Workman was similarly unconcerned by the August spike.

"We still expect a gradual easing in lending growth rates under the weight of new APRA guidelines for lending and higher mortgage rates for investors and those with interest only loans," he said.

The total value of housing finance rose to $33.9 billion in August, and the one per cent increase from July to 57,161 loan approvals, seasonally adjusted, beat market expectations of a rise of 0.5 per cent.

The Australian Bureau of Statistics attributed the surprise lift to recently introduced initiatives in NSW and Victoria, including the abolition or reduction of stamp duty for first-time homebuyers.

Mr Gradwell said first-time buyer commitments in NSW and Victoria had jumped 55 per cent and 35 per cent respectively in the past two months, but warned the boost could be short-lived.

"Overall demand for housing appears to still be solid, although the growth in first home buyer demand is unlikely to be sustainable given ongoing affordability issues," he said.

Mr Workman said the number of loans to first-time buyers was up 39 per cent on a year ago, but at 17 per cent of owner-occupier loans remained well below the 20-year average of 20 per cent.

The Australian dollar dropped about one per cent on the release of the data to dip below 78 US cents, but had bounced back to 78.16 US cents by 1400 AEDT.

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